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Theory Of Consumer Behaviour

Question

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How does change in income of the household affect the demand for a commodity that it buys?

Solution

In case of a normal good (like wheat), an increase in income will increase the demand and fall in income will decrease the demand. But in case of an inferior good (like toned milk), an increase in income usually decreases the demand and fall in income increases the demand.

Some More Questions From Theory Of Consumer Behaviour Chapter

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

What is meant by one good being substitute of other?

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